Bettman Deserves Credit For Insisting Lenders To Devils Are Made Whole

Gary Bettman may have done his best work since becoming commissioner of the NHL when he insisted that any sale of the New Jersey Devils and the operating rights to the
PrudentialCenter made the lenders to outgoing owner Jeff Vanderbeek whole.

National Hockey League (NHL) Commissioner Gary Bettman attends a briefing on the state of hockey in the US, including instructional hockey and safety in youth sports, held by The Congressional Hockey Caucus on Capitol Hill in Washington, DC, on April 24, 2013. (Image credit: AFP/Getty Images via @daylife)

Vanderbeek, who bought a small piece of the hockey team in 2000 and became controlling owner in 2004, had saddled the hockey team and and arena operating company with over $300 million of liabilities and had insufficient cash-flow to pay creditors. The plan was for the Prudential Center be part of a complex that would include an office building, a parking garage for 1,340 vehicles and a 300-room hotel.

The nearby development never came to fruition and Vanderbeek and Newark mayor Corey Booker had an ugly feud over parking revenue, with Booker calling Vanderbeek "a high-class, high-falutin huckster and hustler."

The sad saga left Bettman and the league, which had loaned the Devils $25 million, in a bind. The roughly $170 million of syndicated debt from bankers, including CIT and JP Morgan, was trading for just 83 cents on the dollar in early August. With the clock ticking towards the start of the 2013-14 season time was running out on Vanderbeek and the league.

So prospective buyers were playing hard ball. But if the Devils were sold and bankers took a steep haircut the league's credit standing would take a big hit, making it more difficult and expensive for hockey teams to borrow money. The $320 million being offered by Joshua Harris of Apollo Capital and David Blitzer of Blackstone Group to buy the team and arena lease will leave Vanderbeek with a loss. But it will most importantly make bankers whole with respect to both principal and interest on their loan.